XEQT vs VGRO: Which ETF is Right for You in 2026?

Choosing between XEQT vs VGRO is one of the most common dilemmas for Canadian investors building a passive portfolio. Both are all-in-one ETFs from reputable providers, but they take fundamentally different approaches to risk and returns.

XEQT offers 100% equity exposure for maximum growth potential, while VGRO provides an 80/20 balanced approach with bonds for stability. Which one should you choose for your financial goals?

In this comprehensive comparison, we’ll break down XEQT vs VGRO across all key metrics to help you make an informed decision for your investment strategy.

Quick Overview: XEQT vs VGRO

What is XEQT?

XEQT (iShares Core Equity ETF Portfolio) is an all-in-one global equity ETF that provides 100% stock exposure across global markets. It’s designed for investors who want maximum growth potential and can handle higher volatility.

XEQT’s Asset Allocation:

• Canadian Equity: ~25%
• US Equity: ~45%
• International Developed: ~25%
• Emerging Markets: ~5%
• Bonds: 0%

Key Features of XEQT:

• 100% equity allocation for maximum growth
• Global diversification across ~9,000 companies
• Automatic rebalancing included
• Low MER of 0.20%
• Higher volatility but higher long-term returns

What is VGRO?

VGRO (Vanguard Growth ETF Portfolio) is Vanguard’s balanced all-in-one ETF that combines 80% equities with 20% bonds. It’s designed for investors seeking growth with some downside protection from fixed income.

VGRO’s Asset Allocation:

• Canadian Equity: ~20%
• US Equity: ~36%
• International Developed: ~20%
• Emerging Markets: ~4%
• Bonds (Canadian): ~20%

Key Features of VGRO:

• 80/20 balanced allocation for stability
• Bond cushion reduces volatility
• Global diversification across equities and bonds
• Slightly higher MER of 0.24%
• Lower volatility with moderate returns

Detailed Comparison: XEQT vs VGRO

1. Risk and Volatility

XEQT - Higher Risk, Higher Reward:

• 100% equity means higher volatility
• No bond cushion during market downturns
• Potential drops of 30-50% during bear markets
• Better for risk-tolerant investors
• Longer recovery time after crashes

VGRO - Moderate Risk, Balanced Reward:

• 20% bonds provide downside protection
• Less volatile during market turbulence
• Potential drops of 20-35% during bear markets
• Better for risk-averse investors
• Faster recovery due to bond stability

Winner: Depends on your risk tolerance - XEQT for aggressive investors, VGRO for balanced approach

2. Historical Performance

XEQT Performance (Since Launch):

• 2019: +22.1%
• 2020: +16.8%
• 2021: +22.5%
• 2022: -11.2%
• 2023: +18.7%
• 2024: +15.3%
• Average Annual Return: ~14.0%

VGRO Performance (Since Launch):

• 2018 (partial): +1.2%
• 2019: +17.8%
• 2020: +13.5%
• 2021: +16.2%
• 2022: -9.8%
• 2023: +14.1%
• 2024: +11.7%
• Average Annual Return: ~10.5%

Winner: XEQT (higher returns, but with higher volatility)

3. Performance During Market Crashes

2020 COVID-19 Crash:

• XEQT: Dropped ~30% from peak to trough
• VGRO: Dropped ~23% from peak to trough
• VGRO’s bond allocation provided better downside protection

2022 Bear Market:

• XEQT: -11.2% for the year
• VGRO: -9.8% for the year
• VGRO performed better due to bonds

Winner: VGRO (better downside protection)

4. Dividend Yield

XEQT:

• Current yield: ~2.0%
• Quarterly distributions
• Lower yield (mostly growth stocks)
• Tax-efficient in non-registered accounts

VGRO:

• Current yield: ~2.3%
• Quarterly distributions
• Higher yield (includes bond interest)
• Bond interest taxed as income

Winner: VGRO (slightly higher yield)

5. Costs and Fees

XEQT:

• MER: 0.20%
• On $10,000 invested: $20/year in fees
• Lower cost overall

VGRO:

• MER: 0.24%
• On $10,000 invested: $24/year in fees
• Slightly higher but still very competitive

Winner: XEQT (lower fees by 0.04%)

6. Tax Efficiency

XEQT - Better for Non-Registered Accounts:

• 100% equities mean capital gains treatment
• Canadian dividends get tax credit
• Foreign withholding tax on US portion
• No bond interest to worry about

VGRO - Less Tax-Efficient:

• 80% equities get capital gains treatment
• 20% bond interest taxed as regular income
• Canadian dividends get tax credit
• Less efficient in non-registered accounts

Winner: XEQT (more tax-efficient for non-registered accounts)

Which ETF is Right for You?

Choose XEQT if:

• You have a long investment timeline (20+ years)
• You can handle market volatility without panic selling
• You’re under 40 years old with decades to invest
• You want maximum growth potential
• You’re investing in a TFSA or RRSP
• You have a high risk tolerance
• You don’t need your money for at least 10 years

Choose VGRO if:

• You want a balanced approach to investing
• You prefer less volatility during downturns
• You’re 40-55 years old approaching retirement
• You want some downside protection
• You’re a nervous investor who might panic sell
• You have a moderate risk tolerance
• You want a smoother ride to your goals

Age-Based Recommendations

Ages 20-35: XEQT

• Maximum time to recover from downturns
• Compound growth is your best friend
• Volatility is actually beneficial (buy the dips)
• 100% equity makes sense

Ages 35-45: XEQT (or VGRO)

• Still plenty of time for recovery
• Consider VGRO if you’re risk-averse
• XEQT still appropriate for most
• Personal preference matters more

Ages 45-55: VGRO

• Shorter timeline to retirement
• Downside protection becomes important
• 20% bonds provide stability
• Consider XBAL (60/40) if very conservative

Ages 55+: VGRO or More Conservative

• Preservation becomes critical
• VGRO for moderate risk
• XBAL (60/40) for lower risk
• XCNS (40/60) for conservative approach

Portfolio Strategies: XEQT vs VGRO

100% XEQT Strategy (Aggressive):

• Best for: Young investors (under 40)
• Expected return: 8-10% annually
• Volatility: High
• Pros: Maximum growth potential
• Cons: Steep drops during crashes

100% VGRO Strategy (Balanced):

• Best for: Middle-aged investors (40-55)
• Expected return: 6-8% annually
• Volatility: Moderate
• Pros: Smoother ride, better sleep
• Cons: Lower long-term returns

Mixed Strategy (Custom Allocation):

You can also combine both:

• 75% XEQT + 25% VGRO = ~95% equity, 5% bonds
• 50% XEQT + 50% VGRO = ~90% equity, 10% bonds
• 25% XEQT + 75% VGRO = ~85% equity, 15% bonds

This allows you to fine-tune your equity/bond ratio, though it adds complexity.

Tax Account Considerations

TFSA (Tax-Free Savings Account):

XEQT:

• All growth is tax-free
• No concerns about bond interest taxation
• Excellent choice for TFSA

VGRO:

• All growth is tax-free
• Bond interest doesn’t matter in TFSA
• Also excellent for TFSA

Winner: Tie (both work great in TFSA)

RRSP (Registered Retirement Savings Plan):

XEQT:

• Tax-deferred growth
• No US withholding tax on US equities
• Optimal tax efficiency

VGRO:

• Tax-deferred growth
• No US withholding tax on US equities
• Bond interest grows tax-deferred

Winner: Tie (both work great in RRSP)

Non-Registered Account:

XEQT:

• Better tax efficiency (no bond interest)
• Capital gains treatment
• Dividend tax credit on Canadian portion
• Preferred choice

VGRO:

• Bond interest taxed as regular income
• Less tax-efficient overall
• Still acceptable but not optimal

Winner: XEQT (much more tax-efficient)

Long-Term Performance Projections

XEQT - 30-Year Projection:

Starting investment: $10,000 Annual contribution: $500/month Expected return: 8% annually

• After 10 years: ~$98,000
• After 20 years: ~$299,000
• After 30 years: ~$745,000

VGRO - 30-Year Projection:

Starting investment: $10,000 Annual contribution: $500/month Expected return: 6.5% annually

• After 10 years: ~$89,000
• After 20 years: ~$256,000
• After 30 years: ~$601,000

Difference: ~$144,000 over 30 years favoring XEQT

Real-World Example: Market Crash Scenario

Scenario: Portfolio drops 30%

XEQT Investor:

• Portfolio before crash: $100,000
• Portfolio after crash: $70,000
• Drop: -$30,000
• Emotional impact: High stress
• Recovery time: 2-3 years typically

VGRO Investor:

• Portfolio before crash: $100,000
• Portfolio after crash: $77,000
• Drop: -$23,000
• Emotional impact: Moderate stress
• Recovery time: 1.5-2 years typically

The 20% bond allocation in VGRO provides a meaningful cushion during severe downturns.

How to Buy XEQT or VGRO in Canada

Step 1: Choose Your Platform

• Wealthsimple Trade (recommended - commission-free)
• Questrade (good for frequent traders)
• TD Direct Investing (full-service option)

Step 2: Open Your Account

1. Sign up for free
2. Verify your identity
3. Link your bank account

Step 3: Fund Your Account

• Transfer funds from your bank
• Start with as little as $1
• Funds usually arrive in 1-2 business days

Step 4: Purchase Your ETF

1. Search for “XEQT” or “VGRO”
2. Enter the amount you want to invest
3. Click “Buy” - you’re done!

Common Questions About XEQT vs VGRO

“Can I start with VGRO and switch to XEQT later?”

Yes! Many investors start with VGRO for peace of mind, then gradually shift to XEQT as they become more comfortable with volatility.

“What about switching from XEQT to VGRO as I age?”

Absolutely. A common strategy is holding 100% XEQT when young, then transitioning to VGRO (or even XBAL) as you approach retirement.

“Which one is better for beginners?”

VGRO is slightly better for beginners because the bond allocation prevents panic selling during market crashes. However, young beginners with long timelines should strongly consider XEQT.

“Can I own both?”

Technically yes, but it’s generally unnecessary. You’d be better off choosing one based on your risk tolerance. If you want something in between, consider XGRO (90/10 allocation).

“What about dollar-cost averaging?”

Both ETFs are perfect for dollar-cost averaging. Set up automatic weekly or monthly purchases to build wealth consistently regardless of market conditions.

“Which has better dividends?”

VGRO has a slightly higher yield (~2.3% vs 2.0%) due to bond interest, but dividends shouldn’t be the primary deciding factor. Focus on total return.

The Verdict: XEQT vs VGRO

XEQT Wins for:

✅ Young investors (under 40) ✅ Maximum long-term growth ✅ High risk tolerance ✅ Long investment timelines (20+ years) ✅ Tax efficiency in non-registered accounts ✅ Lower fees (0.20% vs 0.24%) ✅ Aggressive portfolios

VGRO Wins for:

✅ Moderate risk tolerance ✅ Balanced approach to investing ✅ Investors approaching retirement (40-55) ✅ Better sleep during market volatility ✅ Downside protection from bonds ✅ Smoother investment journey ✅ Nervous or new investors

My Personal Recommendation

For most investors under 40: Start with XEQT

If you have 20+ years until retirement, the higher volatility of XEQT is actually beneficial. The extra returns compound significantly over decades, and you have plenty of time to recover from market crashes.

For investors 40-55: Choose VGRO

As retirement approaches, capital preservation becomes more important. The 20% bond allocation in VGRO provides meaningful downside protection while still delivering solid growth.

For investors 55+: VGRO or more conservative

Consider VGRO at minimum, or even XBAL (60/40) if you’re closer to retirement. Protecting your wealth becomes the priority.

Transition Strategy: XEQT to VGRO

Many investors use a lifecycle approach:

Ages 20-40: 100% XEQT Ages 40-50: Transition to VGRO or mix of both Ages 50-60: 100% VGRO Ages 60+: XBAL (60/40) or XCNS (40/60)

This allows you to take maximum advantage of growth when young, then gradually reduce risk as you age.

Ready to Start Investing?

Whether you choose XEQT for aggressive growth or VGRO for balanced stability, you’re making a smart decision. Both are excellent all-in-one ETFs that provide instant global diversification with automatic rebalancing.

The most important thing is to start investing early and stay consistent. Pick the ETF that matches your risk tolerance and time horizon, set up automatic contributions, and let compound growth do the heavy lifting.

Remember: Time in the market beats timing the market.

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this doesn’t affect my honest assessment. Both XEQT and VGRO are excellent choices - your decision should be based on your personal risk tolerance and investment timeline.